PDZ.L Regulatory News (PDZ)

PRAIRIE MINING LIMITED

NEWS RELEASE | 30 OCTOBER 2015 | ASX/LSE/WSE: PDZ

SEPTEMBER 2015 QUARTERLY REPORT

Prairie Mining Limited ("Prairie" or the "Company") is pleased to present its quarterly report for the period ending 30 September 2015.

Highlights during, and subsequent to, the quarter include:

HIGHLIGHTS:

· CD Capital Investment Agreement Approved and Settled - Prairie shareholders voted to approve the terms for the investment of up to A$83 million from global natural resources private equity fund CD Capital to upgrade, expand and develop the Lublin Coal Project ("LCP" or "Project");

· London and Warsaw Listings - Prairie successfully listed on the main board of the London Stock Exchange and Warsaw Stock Exchange under the ticker PDZ. The listings are expected to further raise Prairie's profile and facilitate the participation of UK, Polish and other European investors in Prairie's future growth;

· Coal Resource Upgrade - Substantial increase in Indicated Coal Resources to 333 million tonnes for the LCP, representing a 96% increase from the Coal Resource Estimate in 2014. The resource upgrade confirmed Free Swell Index ("FSI") numbers of 3.5 - 6.0 in all target mining areas of the key 391 coal seam, comparable to international benchmark semi-soft coking coals as well as semi-soft coking coals already produced in Poland;

· Pre-Feasibility Study ("PFS") - Work continued on the PFS for the Project with the study expected to be completed during late 2015 or early 2016;

· Railway Spur Line Studies - Continued studies of potential rail routes linking the various potential mine site locations to the national railway grid;

· Environmental and Social Impact Assessment ("ESIA") - Continued baseline studies for the ESIA, the completion of which is a pre-requisite for the grant of a mining concession over the LCP; and

· Corporate - As at 30 September 2015, the Company had cash and listed securities of approximately A$20.8 million, including A$15 million from the settlement of the CD Capital transaction.

GOING FORWARD:

The Company will continue to work towards further development milestones at the Project including the following:

· Completion of the PFS during late 2015 or early 2016;

· Completion of comprehensive coal marketing studies encompassing export and domestic marketing opportunities for the LCP;

· Completion of Environmental Baseline Studies which will feed into the ESIA;

· Continue work on the Deposit Development Plan which forms a key part of the Mining Concession Appliation; and

· Further project permitting including site selections and applications for spatial planning.

For further information contact:

LUBLIN COAL PROJECT

The Lublin Coal Project is a large scale premium coal project located in the Lublin Coal Basin in south east Poland. The Lublin Coal Basin is an established coal producing province which is well serviced by modern and highly efficient infrastructure, offering the potential for low capital intensity mine development. The LCP is situated adjacent to the Bogdanka coal mine which has been in commercial production since 1982 and is the lowest cost hard coal producer in Europe.

CD Capital Investment Agreement Approved and Settled

On 21 September 2015, Prairie announced that that all necessary conditions to settle the investment agreement with CD Capital Natural Resources Fund III LP ("CD Capital") had been met, including shareholder approval of the transaction, which triggered the payment of the initial investment tranche of A$15 million to Prairie.

As a result of the closing of the transaction, Prairie welcomed two highly experienced mining executives to its Board of Directors with the appointment of Ms Carmel Daniele, Founder and Fund Manager of CD Capital, and Mr Emil Morfett, CD Capital's Senior Mining Analyst.

The transaction was structured in three tranches as follows:

· a private placement by PDZ Holdings Pty Ltd ("PDZ Holdings") (a wholly-owned subsidiary of Prairie which indirectly holds the Lublin Coal Project) of non-interest bearing convertible loan notes with an aggregate principal amount of A$15 million to CD Capital, exchangeable for ordinary shares of Prairie at A$0.335 per share;

· on exchange of the convertible notes, the grant of unlisted options in Prairie with an exercise price of A$0.60 per option for a further A$13 million once exercised; and

· a priority right for CD Capital to invest a further A$55 million in any future funding conducted by Prairie.

The receipt by PDZ Holdings of the initial A$15 million will fund the de-risking of the Project towards a construction decision. The completion of the transaction will fully fund all required works up to a positive mine development decision at the Lublin Coal Project, including the completion of a Definitive Feasibility Study ("DFS") and all required permitting.

CD Capital securing rights to provide A$55 million as part of future Prairie fund raising provides a solid platform for Prairie to progress project financing for the successful development of the Lublin Coal Project.

CD Capital is a global natural resources private equity fund with a proven track record of successfully identifying and investing in world-class mining and resource assets at the growth equity stage. CD Capital unlocks value in high quality mining projects through a strategic hands-on approach to development and has a long term investment horizon. CD Capital's underlying investor base is made up of professional institutional investors with strong representation from endowments and foundations

Listing on the main boards of London Stock Exchange and Warsaw Stock Exchange

During the quarter, Prairie was successfully admitted to trading on the main board of the London Stock Exchange (standard listing segment of the Official List of the UK Financial Conduct Authority ("FCA")) and the Warsaw Stock Exchange,

Prairie's existing listing on the Australian Securities Exchange ("ASX") remains unchanged with Prairie's shares (or depository interests representing shares) being transferable between the ASX, LSE and WSE, using the PDZ ticker.

The admissions now position Prairie for the next stage of its development by further raising the profile of the Company and facilitating the future participation of UK, Polish and other European investors in Prairie's growth.

Prairie's CEO Ben Stoikovich commented that: "I am extremely pleased that we successfully executed our plan to list Prairie on the main boards of two major European exchanges, the LSE and WSE. Our company is moving into an exciting growth phase as we commence work on a mining concession application for the Lublin Coal Project. In addition we will be moving forward with the strong financial support of global natural resources private equity fund CD Capital who recently agreed to invest up to A$83 million to upgrade, expand and develop the Project. The listings are expected to raise the profile of Prairie and facilitate the participation of UK, Polish and other European investors in our future growth.

Coal Resource Upgrade

An updated Coal Resource Estimate ("CRE") for the LCP was published during the quarter, delivering a substantial increase in Indicated Coal Resources to 333 million tonnes ("Mt") which represents a 96% increase from the previous Coal Resource Estimate in 2014.

The updated CRE focused on increasing the number of Indicated tonnes within the overall resource to support the mine plan for the PFS as the Project heads into the development phase.

The CRE was reported in accordance with the JORC Code (2012) and comprises 333Mt in the Indicated Category as part of a Global CRE of 722Mt. The CRE has been modelled based on data from 10 coal seams that were considered economically extractable and applies a 1m seam thickness cut off and a 100m stand-off from the Jurassic formation.

Pre-Feasibility Study

During the quarter the Company progressed with the PFS. A joint team of consultants from Golder Associates (UK) Ltd ("Golder") and Royal HaskoningDHV ("RHDHV") are managing the PFS which has been designed to comply with international best practise in all study areas in order to support detailed technical and financial due diligence by strategic equity partners, offtakers, financial institutions and to promote a seamless transition to the DFS.

During the quarter the Company completed the following work streams:

· Completed preliminary mine site layout;

· Finalised salary structure and rates ready for review by third party (Deloitte);

· Finalised organisational structures that complies with Polish statutory requirements and International best practice;

· Received draft report and costings for transport corridor link between mine site and main rail line;

· Stage 1 Report of 110kV power supply option completed and multi attribute decision analysis carried out to determine best option(s); Stage 2 commissioned to bring selected concept to appropriate standard for PFS;

· Pillar design completed by Golder and integrated into mine plans;

· Shaft sinking and hoist designs ongoing with DTS;

· Appointed Mr David McKay as Hydrogeological consultant to the project;

· Deposit Development Plan 50% completed; and

· Collated cost data from Polish suppliers

Going forward, Prairie's PFS team will now focus on the completion of the PFS during late 2015 or early 2016 including the following study requirements:

· Shaft sinking and hoisting design;

· Geotechnical parameters for roof support system and optimised longwall panel layouts;

· Mine development and production scheduling;

· Finalisation of all surface engineering and transport systems;

· Finalising CHPP design;

· Waste management;

· Staffing requirements;

· Estimates of capital and operating costs; and

· Study reporting.

As part of the PFS work program, Prairie's team is also compiling a detailed schedule of works required for the DFS for the Project.

Railway Spur Line Studies

Prairie's LCP is located approximately 20km from Poland's national railway grid, connecting the Project with domestic and wider European coal markets. During the quarter, Prairie made significant progress with the analysis and selection of railway spur line options to link the Project with the national grid.

In the previous quarter Prairie's study team selected possible rail routes for the rail spur line, resulting in the preparation of a Stage One report on supply options. This was followed during the current quarter with the commissioning of a Stage Two report to select the preferred option(s) and bills of quantities /cost for potential rail links.

Environmental & Social Impact Assessment

Prairie recently completed a number of major work program items in relation to its ongoing ESIA for the LCP. Prairie's ESIA, being conducted by Multiconsult (formerly WS Atkins), is an extensive study that includes a wide range of environmental monitoring programs, field surveys, ecosystem sensitivity assessments, socio-economic surveys and a detailed community study and stakeholder engagement plan. The scope of Prairie's ESIA has been defined to meet Polish, European Union and international standards, including compliance with the Equator Principles as required by Equator Principles Financial Institutions, to support the future financing of the Project.

Prior to the commencement of the environmental baseline field work studies for the LCP, Prairie's ESIA study team completed a desktop review of the available environmental and social data for its concession areas. Given the fact that existing mining operations exist adjacent to Prairie's concessions, Prairie has benefitted by having access to a significant quantity of existing data for the region which represent actual mining conditions, including surface water flows and quality, some information on groundwater and ground levels after subsidence, noise and waste characteristics. This data, where it relates to areas already affected by the existing mine; will assist Prairie in the accuracy of its predictions of impacts resulting from new mining activity.

Following completion of this desktop review, Multiconsult immediately commenced with the required baseline studies to obtain data that was not already publicly available. The baseline studies are now underway for all concession areas at the LCP, and will continue for some time to capture seasonal differences.

The Company has also completed its internal Stakeholder Engagement Plan which is a key component of the ESIA process, and will ensure that the Company communicates effectively with all relevant stakeholders of the Project. In October 2015, Prairie Mining team members underwent a training course "Foundations in Public Participation" led by International Association for Public Participation (IAP2). The IAP2 course is a professional, well recognised and Equator Principles compliant training for any enterprise which plans for public participation during the project planning and permitting phases.

Prairie is on track to complete all environmental baseline studies during 2015 and submit its completed ESIA report(s) to the Polish authorities during 2016. The submitted ESIA will provide the Polish authorities with sufficient information to award an Environmental Consent Decision, which is a pre-requisite for the granting of a Mining Concession over the Company's concessions.

Corporate

Shareholding in B2Gold

As at 30 September 2015, the Company held 3.75 million fully paid shares in B2Gold Corp. (TSX:BTO) ("B2Gold"). The B2Gold shares are classified as held-for-trading current financial assets in Prairie's Statement of Financial Position.

Financial Position

As at 30 September 2015, the Company had cash reserves and held-for-trading listed securities of approximately $20.8 million, placing the Company in an excellent position to complete its planned development activities at the LCP.

Board Changes

Pursuant to the Investment Agreement with CD Capital, the Company appointed Ms Carmel Daniele and Mr Emil Morfett to the Board of Directors with Mr John Welborn and Mr Anastasios Arima both resigning as Directors of the Company.

Exploration Tenement Information

On 1 July 2015, Prairie announced that it had secured the Exclusive Right to apply for, and consequently be granted, a mining concession for the LCP. This follows the approval by Poland's Ministry of Environments ("MoE") of Prairie's previously submitted geological documentation and is in accordance with the terms of the Polish geological and mining law. Geological documentation is a resource estimate prepared according to the standards prescribed in the Polish resource reporting code and follows the successful completion of all required exploration works by Prairie under its concession commitments with the MoE.

As a result of its geological documentation being approved, Prairie is now the only entity that can lodge a mining concession application over the LCP within the next three (3) years.

The approved geological documentation covers an area comprising all four of the original exploration concessions granted to Prairie (K-4-5, K-6-7, K-8 and K-9) and includes the full extent of the targeted resources within the mine plan for the Project. As part of its application for the approval of geological documentation, Prairie relinquished a small area to the north of the K-9 concession as the coal within this region has been deemed not of mineable thickness. In addition, Prairie's geological documentation did not include the Sawin concession which may be added at a later date.

Prairie has applied for the extension of its exploration concessions to facilitate further exploration activities over the LCP if required. The extension of the exploration concessions is unrelated to Prairie's existing Exclusive Right to apply for a mining concession for the LCP following the approval of its geological documentation.

As at 30 September 2015, the Company has an interest in the following tenements:

* The Company has entered into a farm-in agreement to assign and divest up to 100% interest in the Prairie Downs Project.

Forward Looking Statements

This release may include forward-looking statements. These forward-looking statements are based on Prairie's expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Prairie, which could cause actual results to differ materially from such statements. Prairie makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

Competent Person Statements

The information in this announcement that relates to Exploration Results and Coal Resources was extracted from Prairie's ASX announcements dated 23 July 2015 entitled 'Substantial Increase of 96% in Indicated Coal Resources to 333 Million Tonnes', 30 April entitled 'March 2015 Quarterly Report' and 13 March 2014 entitled 'Initial Washability Results Display Exceptionally High Yields' which are available to view on the company's website at www.pdz.com.au

The information in in the original ASX announcements that relates Coal Resources is based on information compiled or reviewed by Mr Samuel Moorhouse who is a Competent Person and a Chartered Geologist and Fellow of the Geological Society of London. Mr Moorhouse is employed by independent consultants Royal HaskoningDHV. Mr Moorhouse has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

The information in the original ASX announcements that related to Exploration Results (drill holes Syczyn 7, Kopina 1, Kulik and Borowo) is based on information compiled or reviewed by Dr Richard Lowman, a Competent Person who is a Fellow of the Geological Society of London. Dr Lowman is employed by independent consultants Wardell Armstrong LLP which owns Wardell Armstrong Limited. Dr Lowman has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

The information in the original ASX announcement that relates to Exploration Results (drill holes: Cycow 7, Cycow 8 and Syczyn 8) is based on information compiled or reviewed by Mr Jonathan O'Dell, a Competent Person who is a Member of the Australian Institute of Mining and Metallurgy. Mr O'Dell is a consultant employed full time by Prairie Mining Limited. Mr O'Dell has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.

Prairie confirms that: a) it is not aware of any new information or data that materially affects the information included in the original ASX announcements and; b) all material assumptions and technical parameters underpinning the Coal Resource included in the original ASX announcement continue to apply and have not materially changed; c) the form and context in which the relevant Competent Persons' findings are presented in these announcements have not been materially modified from the original ASX announcement.